A well kept secret : merchants, not the credit card company, pay for the points on cards that reward you for using them. Merchants eventually add this cost onto their products, so you end up paying for those points yourself, spread out with the other shoppers who may be using cash or check.

Stranger yet, merchants are charged a fee, in a small business around 2.25%, for accessing YOUR cash in your checking account whenever you use a debit card. Certainly it is a conveniece, but at a cost, again added to the cost of the product over time.

On top of that, some cards, called “non-qualified” by the merchant services providers – the folks who provide the service to businesses, come with a hefty $1.49 swipe fee on top of their other fees for any size purchase, even as small as a dollar item. So when this happens the small business could be paying the credit card company over $1.50 to sell a $1 item. How many points does that get you with your favorite merchant?